Quantum computer, device that employs properties described by quantum mechanics to enhance computations.

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computer: Quantum computing

According to quantum mechanics, an electron has a binary (two-valued) property known as spin. This suggests another way of representing a bit of information. While single-particle information storage is attractive, it would be difficult to manipulate. The fundamental idea of quantum computing, however,

As early as 1959 the American physicist and Nobel laureate Richard Feynman noted that, as electronic components begin to reach microscopic scales, effects predicted by quantum mechanics occurwhich, he suggested, might be exploited in the design of more powerful computers. In particular, quantum researchers hope to harness a phenomenon known as superposition. In the quantum mechanical world, objects do not necessarily have clearly defined states, as demonstrated by the famous experiment in which a single photon of light passing through a screen with two small slits will produce a wavelike interference pattern, or superposition of all available paths. (See wave-particle duality.) However, when one slit is closedor a detector is used to determine which slit the photon passed throughthe interference pattern disappears. In consequence, a quantum system exists in all possible states before a measurement collapses the system into one state. Harnessing this phenomenon in a computer promises to expand computational power greatly. A traditional digital computer employs binary digits, or bits, that can be in one of two states, represented as 0 and 1; thus, for example, a 4-bit computer register can hold any one of 16 (24) possible numbers. In contrast, a quantum bit (qubit) exists in a wavelike superposition of values from 0 to 1; thus, for example, a 4-qubit computer register can hold 16 different numbers simultaneously. In theory, a quantum computer can therefore operate on a great many values in parallel, so that a 30-qubit quantum computer would be comparable to a digital computer capable of performing 10 trillion floating-point operations per second (TFLOPS)comparable to the speed of the fastest supercomputers.

During the 1980s and 90s the theory of quantum computers advanced considerably beyond Feynmans early speculations. In 1985 David Deutsch of the University of Oxford described the construction of quantum logic gates for a universal quantum computer, and in 1994 Peter Shor of AT&T devised an algorithm to factor numbers with a quantum computer that would require as few as six qubits (although many more qubits would be necessary for factoring large numbers in a reasonable time). When a practical quantum computer is built, it will break current encryption schemes based on multiplying two large primes; in compensation, quantum mechanical effects offer a new method of secure communication known as quantum encryption. However, actually building a useful quantum computer has proved difficult. Although the potential of quantum computers is enormous, the requirements are equally stringent. A quantum computer must maintain coherence between its qubits (known as quantum entanglement) long enough to perform an algorithm; because of nearly inevitable interactions with the environment (decoherence), practical methods of detecting and correcting errors need to be devised; and, finally, since measuring a quantum system disturbs its state, reliable methods of extracting information must be developed.

Plans for building quantum computers have been proposed; although several demonstrate the fundamental principles, none is beyond the experimental stage. Three of the most promising approaches are presented below: nuclear magnetic resonance (NMR), ion traps, and quantum dots.

In 1998 Isaac Chuang of the Los Alamos National Laboratory, Neil Gershenfeld of the Massachusetts Institute of Technology (MIT), and Mark Kubinec of the University of California at Berkeley created the first quantum computer (2-qubit) that could be loaded with data and output a solution. Although their system was coherent for only a few nanoseconds and trivial from the perspective of solving meaningful problems, it demonstrated the principles of quantum computation. Rather than trying to isolate a few subatomic particles, they dissolved a large number of chloroform molecules (CHCL3) in water at room temperature and applied a magnetic field to orient the spins of the carbon and hydrogen nuclei in the chloroform. (Because ordinary carbon has no magnetic spin, their solution used an isotope, carbon-13.) A spin parallel to the external magnetic field could then be interpreted as a 1 and an antiparallel spin as 0, and the hydrogen nuclei and carbon-13 nuclei could be treated collectively as a 2-qubit system. In addition to the external magnetic field, radio frequency pulses were applied to cause spin states to flip, thereby creating superimposed parallel and antiparallel states. Further pulses were applied to execute a simple algorithm and to examine the systems final state. This type of quantum computer can be extended by using molecules with more individually addressable nuclei. In fact, in March 2000 Emanuel Knill, Raymond Laflamme, and Rudy Martinez of Los Alamos and Ching-Hua Tseng of MIT announced that they had created a 7-qubit quantum computer using trans-crotonic acid. However, many researchers are skeptical about extending magnetic techniques much beyond 10 to 15 qubits because of diminishing coherence among the nuclei.

Just one week before the announcement of a 7-qubit quantum computer, physicist David Wineland and colleagues at the U.S. National Institute for Standards and Technology (NIST) announced that they had created a 4-qubit quantum computer by entangling four ionized beryllium atoms using an electromagnetic trap. After confining the ions in a linear arrangement, a laser cooled the particles almost to absolute zero and synchronized their spin states. Finally, a laser was used to entangle the particles, creating a superposition of both spin-up and spin-down states simultaneously for all four ions. Again, this approach demonstrated basic principles of quantum computing, but scaling up the technique to practical dimensions remains problematic.

Quantum computers based on semiconductor technology are yet another possibility. In a common approach a discrete number of free electrons (qubits) reside within extremely small regions, known as quantum dots, and in one of two spin states, interpreted as 0 and 1. Although prone to decoherence, such quantum computers build on well-established, solid-state techniques and offer the prospect of readily applying integrated circuit scaling technology. In addition, large ensembles of identical quantum dots could potentially be manufactured on a single silicon chip. The chip operates in an external magnetic field that controls electron spin states, while neighbouring electrons are weakly coupled (entangled) through quantum mechanical effects. An array of superimposed wire electrodes allows individual quantum dots to be addressed, algorithms executed, and results deduced. Such a system necessarily must be operated at temperatures near absolute zero to minimize environmental decoherence, but it has the potential to incorporate very large numbers of qubits.

At CES, IBM today announced its first commercial quantum computer for use outside of the lab. The 20-qubit system combines into a single package the quantum and classical computing parts it takes to use a machine like this for research and business applications. That package, the IBM Q system, is still huge, of course, but it includes everything a company would need to get started with its quantum computing experiments, including all the machinery necessary to cool the quantum computing hardware.

While IBM describes it as the first fully integrated universal quantum computing system designed for scientific and commercial use, its worth stressing that a 20-qubit machine is nowhere near powerful enough for most of the commercial applications that people envision for a quantum computer with more qubits and qubits that are useful for more than 100 microseconds. Its no surprise then, that IBM stresses that this is a first attempt and that the systems are designed to one day tackle problems that are currently seen as too complex and exponential in nature for classical systems to handle. Right now, were not quite there yet, but the company also notes that these systems are upgradable (and easy to maintain).

The IBM Q System One is a major step forward in the commercialization of quantum computing, said Arvind Krishna, senior vice president of Hybrid Cloud and director of IBM Research. This new system is critical in expanding quantum computing beyond the walls of the research lab as we work to develop practical quantum applications for business and science.

More than anything, though, IBM seems to be proud of the design of the Q systems. In a move that harkens back to Crays supercomputers with its expensive couches, IBM worked withdesign studios Map Project Office and Universal Design Studio, as well Goppion, the company that has built, among other things, the display cases that house the U.K.s crown jewels and the Mona Lisa. IBM clearly thinks of the Q system as a piece of art and, indeed, the final result is quite stunning. Its a nine-foot-tall and nine-foot-wide airtight box, with the quantum computing chandelier hanging in the middle, with all of the parts neatly hidden away.

If you want to buy yourself a quantum computer, youll have to work with IBM, though. It wont be available with free two-day shipping on Amazon anytime soon.

In related news, IBM also announced the IBM Q Network, a partnership with ExxonMobil and research labs like CERN and Fermilab that aims to build a community that brings together the business and research interests to explore use cases for quantum computing. The organizations that partner with IBM will get access to its quantum software and cloud-based quantum computing systems.

Editor’s Note, Dec. 5, 2017:Since we first published this story in July, the 12 cryptocurrencies listed below have enjoyed an average gain of 145%. Readers who actedon these recommendationswhen we first released them have doubled their money or better. Its not too late to profit from the cryptocurrency boom. You just need to know how to find the fastest cryptocurrency profits. Stay ahead of the money and make more with our free, real-time Cryptocurrency Profit Alerts sent to your inbox. Sign up now here.

Bitcoin, with its first-mover advantage and robust security, is the best cryptocurrency to invest in today.

There are other cryptocurrencies worth putting some money into and we’ll look at some of those in a moment.

But Bitcoin (BTC) has emerged as the blue chip of the bunch.

In a nutshell, here’s why Bitcoin remains the best cryptocurrency to invest in despite all the competition:

And despite the big gains Bitcoin has enjoyed more than 180% just in 2017 it’s not too late to invest. The price of Bitcoin is likely to double by the end of the year. And over the next decade or so, the Bitcoin price could reach $100,000 or even $1 million.

Trending: Should I Sell My Bitcoin Now That It’s Above $10,000?

But what about Ethereum? The No. 2 cryptocurrency is also a very good bet

Having launched in 2015, Ethereum (ETH) is not only younger than Bitcoin, it’s younger than hundreds of other cryptocurrencies.

And yet it quickly surged to the No. 2 spot, giving you some idea of how much potential Ethereum has.

That potential is reflected in the huge gains in the Ethereum price. Even with its recent pullback to just under $200, the price of Ethereum is up 2,300% this year alone.

Some mistakenly believe Ethereum is in a rivalry with Bitcoin, but their differences make them complimentary.

These are also the traits that make Ethereum the next-best cryptocurrency to invest in:

These are the primary reasons why Ethereum price predictions for the end of 2017 go as high as $500.

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Still, some investors want to venture beyond Bitcoin and Ethereum into the wider world of cryptocurrencies

Of the more than 1,000 cryptocurrencies that have been launched, all but 26 trade for under $5.

It’s easy for investors to believe a cryptocurrency they pick up for $0.50 each will go to $100 or $1,000 and make them rich, even starting with modest sums of a few hundred dollars.

While not impossible, such an outcome is not likely. Apart from Bitcoin and Ethereum, only a handful of the hundreds of cryptocurrencies out there will enjoy substantial gains.

Think of cryptocurrencies today in terms of the dot-com boom of the late 1990s. Many of the overhyped Internet-based companies of the day went belly up in the dot-com bust of 2000-2001, taking billions of investor dollars with them.

But those with sound business concepts Amazon.com Inc. (Nasdaq: AMZN), eBay Inc. (Nasdaq: EBAY), and Priceline Group Inc. (Nasdaq: PCLN) went on to realize the promise of the dot-com hype.

The challenge is to figure out their latter-day equivalents among the cryptocurrencies.

For those willing and able to bear the risk, we’ve put together this list of the 10 best cryptocurrencies to invest in outside of Bitcoin and Ethereum

A cryptocurrency is a digital coin, designed to be transferred between people in virtual transactions. Cryptocurrencies exist only as data and not as physical objects; you cannot actually hold a Bitcoin in your hand or keep Ethereum in your safe. Owning a Bitcoin means you have the collective agreement of each and every computer on the Bitcoin network that it is currently owned by you and more importantly that it was legitimately created by a miner.

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Cryptocurrencies are handled like cash but are mined like gold. Mining is simply the process of verifying a crypto transaction. People around the world transfer e-coins from wallet to wallet, while miners use computer-processing power to maintain the blockchain and verify these transactions.

When a new crypto is launched, its founders announce how many coins will be mined. Once the quota is reached, no further coins can be produced. The first digital coin introduced was Bitcoin, which remains today the benchmark for all other digital coins. Among other currencies that have made their way into the cryptocurrency hall-of-fame we have: Ethereum, Ripple, Litecoin, EOS, and a number of derived currencies, including Bitcoin Cash and Bitcoin Gold.

Unlike traditional transactions, cryptocurrency transfers are not handled by banks or other financial institutions. Every time someone pays via e-coin, his payment is recorded on a digital ledger called the blockchain.

A list of transaction records, called blocks, which are linked to each other and encrypted. The blockchain is continuously growing and is completely open to anyone. Each block in the blockchain contains:

When a new block is created, it is sent to all the users in the network. Each user then verifies the block and it is added to the blockchain.

Each one of the numerous cryptocurrencies existing today has its own blockchain, and the complex math that is at the heart of the blockchain is computer generated. In order to run a transaction on the blockchain you need an e-wallet (or cryptocurrency wallet).

The biggest problem of the Blockchain is its reliance on miners. This is exactly why the cryptocurrency called IOTA (the Internet of Thigs Application) was created in 2016. IOTA also battles increasing transaction fees and network scalability. IOTAs blockchain is called Tangle. It is a blockchain with no blocks and no chains. In this system, the users themselves are responsible for validating transactions. This means theres no need for approval from miners; so users enjoy a fee-free transaction and an increased process speed.

A piece of software or hardware that gives you the ability to store and exchange your cryptocurrencies. Each cryptocurrency wallet is encrypted and unique. When you send funds you actually broadcast an encrypted message to the recipient. Only the recipients cryptocurrency wallet can decrypt that message and thus receive the funds. A hardware cryptocurrency wallet is considered to have key advantages over other software wallets:

AvaTrade offers all traders the opportunity to trade a wide range of top-ranked digital coins 24/7. Due to the massive popularity of cryptocurrencies over the past couple of years, they have become a conventional and popular asset. The main purpose of this new technology is to allow people to buy, trade and invest without having to rely on banks or any other financial institutions.

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This mega-powerful currency has not only opened the gate for other currencies, but also leads the cryptocurrency world with pride. It is governed to make sure no extra Bitcoin is produced, as a maximum quantity of 21 Million Bitcoin units was agreed to. When introduced, the rate was $1 to 1,309 BTC. The wheel has turned, and when Bitcoin reached the all-time high of $19,783.21 in 2017, it was certainly a meaningful milestone for Satoshi Nakamoto, the creator of Bitcoin.

Bitcoin Cash (BCH) was created by the Bitcoin hard fork on August 1, 2017, resulting in a new version of the blockchain with different rules. By switching from the main Bitcoin blockchain to a new version, the software now has a capacity for a larger number of transactions.

Bitcoin Gold (BTG) is the second fork from Bitcoin (i.e. the second version to stem from Bitcoins source code). It retains Bitcoins transaction history, meaning that if you owned Bitcoin before the fork, you now own the equal amount of Bitcoin Gold. This cryptocurrency aims to introduce an alternative mining algorithm that is less susceptible to ASIC-based optimization, therefore allowing users to earn more with their computer cycles.

Altcoins is the general term associated with the cryptocurrencies launched after Bitcoins success. At first, these were mere copies mimicking the original Bitcoin. Today, there are over 1,000 of these, and the list just keeps growing. Most crypto coins are launched following an ICO (Initial Coin Offering a form of crowdfunding) in which the developers raise cash by offering a limited number of initial coins to finance technological development. So far, besides the list below, we can find names, such as Namecoin, Peercoin, Bytecoin, Deutsche eMark, Novacoin, Cryptogenic Bullion, Quark, DarkCoin and Mangocoinz (for smartphones).

Ethereum (ETH) is more than just a currency its like one giant computer housing many computers around the globe. Ethereum can respond to sophisticated requests. Its ability to store revolutionary computer programs, known as smart contracts, gives Ethereum an edge over Bitcoin and has attracted attention from banks around the world. This, among other factors, has led to a jump of almost 10,000% in 2017!

Litecoin (LTC) is similar to Bitcoin in many of its characteristics and is also one of the more veteran cryptocurrencies out there. However, there are two main differences between Litecoin and Bitcoin: Speed and amount. While it takes 10 minutes to create a Bitcoin block, Litecoin demands roughly 2.5 minutes to create a block meaning 4 times the speed. Moreover, Litecoin attracts many users, as it can produce 4 times the quantity of Bitcoin! However, as Litecoin uses highly complex cryptography, often mining it is more complicated than other cryptocurrencies.

Ripple (XRP) can be described as the next generation of payment networks. Originally set up to engage financial industry leaders, the digital currency has been a leading technology so far. This cryptocurrency exploded in 2017, going from $0.0063 to over $1.

The e-coin that is considered Ethereums biggest competitor. The EOS blockchain gained its fame because of the way it effectively records and secures transactions. It is similar to the Ethereum blockchain but faster, more scalable, and allows users to build decentralized applications more efficiently. Market analysts are promoting the currency as The Most Powerful Infrastructure for Decentralized Applications and expect the coin to be dumped and pumped, which could provide some interesting short-term opportunities.

Cryptocurrencies allow traders to diversify their investment portfolio, as their price is mainly determined by demand and supply; Their value has a low correlation to national economies or political scenarios. Once Bitcoin surpassed the price of gold in 2017, US markets introduced 2 ETFs on Bitcoin and drew more and more institutional money into the world of cryptocurrencies. In 2017, Indian PM Narendra Modi has announced the gradual replacement of paper currency with electronic currency; In March 2018, the Marshall Islands announced that they would be introducing a cryptocurrency to replace US dollars as their main currency; other central banks are investigating the adoption of blockchain-like technologies in short cryptocurrencies are probably here to stay. A growing number of crypto investors all over the world have already discovered the benefits:

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Thailand has officially granted licenses to three cryptocurrency exchanges and one broker-dealer. Two exchanges have been rejected and one is still being reviewed. These seven companies have been temporarily allowed to operate in the country. Two of them will now begin closing down their businesses.

The Thai Securities and Exchange Commission (SEC) announced on Tuesday the results of the applications for crypto business licenses. Seven companies applied for a license and have been allowed to operate their crypto businesses while the regulators reviewed their applications.

The countrys ministry of finance has granted digital asset business licences to four applicants, the Thai SEC detailed, noting that two applications have been rejected and one is still under review.

Meanwhile, the license application filed by local crypto exchange Coin Asset Co. Ltd. is still being reviewed but the company is permitted to keep operating while the decision has not been made. The delay is due to a change of company executives, which is material information for the consideration of the application, the commission described.

The applicants failed to meet the approval criteria regarding important work systems.

The commission added, For example, the systems for custody of client assets and know your customer (KYC) were inconsistent with the SECs acceptable standards, while the sufficiency of their IT security and cyber security systems could not be verified.

The two businesses have been notified of the closing down procedure by the Thai SEC.

The countrys ministry of finance is allowing both of them to continue operating until Jan. 14 to ensure proper proceeding of related matters including notification to the clients regarding asset refunds or asset transfers to other digital asset operators according to the clients order, the SEC noted. The twoare required to return customer assets and notify the commission of the results. However, the regulator clarified:

The application rejection this time does not invalidate their right to apply for a digital asset business licence in the future as long as the application criteria are met.

What do you think of Thailand granting licenses to four crypto operators and rejecting two? Let us know in the comments section below.

New cryptocurrency exchange has reportedly raised $27.5 million from investors which include NASDAQ Ventures and Fidelity Investments. The platform will offer cryptocurrency trading on spot and future markets starting next year.

Seemingly unphased by the current bleeding conditions of the cryptocurrency market, Fidelity Investments and NASDAQ Ventures have reportedly taken part in a funding round of new cryptocurrency exchange ErisX. The total amount raised is $27.5 million,Reutersreports.

According to the report, Nasdaq has already confirmed its participation while Fidelity is yet to respond to the requests for comment.

The new cryptocurrency exchange will purportedly enable investors to trade Bitcoin (BTC) 00, Litecoin (LTC) 00, and Ether (ETH) 00 on both spot and futures markets. It is expected to launch in 2019 following regulatory approval.

Speaking on the matter was Thomas Chippas, CEO at ErisX, who noted that the investments will be used tobuild out our infrastructure and secure the appropriate steps are taken to develop a regulated market for digital assets, and to hire staff.

Its worth noting that Chippas, according to his LinkedIn profile, comes from the banking sector and a former ManagingDirector at Citi and Barclays.

Nasdaqs involvement in ErisX comes just a few days after it renewed its vow to offer Bitcoin futures despite the current BTC price 00 drop.

Bitcoinistreported November 27 that NASDAQhas been working to satisfy the concerns of the US main swaps regulator, the Commodity Futures Trading Commission (CFTC), before launching the contracts.

Fidelitys participation in ErisX also makes sense, as the asset manager recently said that it wont open its own exchange, but instead will focus on providing Bitcoin custody solution.

However, earlier in October, the company also stated that it intends to open cryptocurrency trading to its 27 million customers, so perhaps this falls in line with their involvement in ErisX latest round of investment.

What do you think of Fidelity and Nasdaqs involvement in ErisX? Dont hesitate to let us know in the comments below!

CryptocurrencyDescriptionBitcoin (BTC)Bitcoin is the original peer-to-peer cryptocurrency founded in 2009 by Satoshi Nakomoto.Ethereum (ETH)Ethereum is a smart contract platform for decentralized applications (dapps).XRP (XRP)Ripple created XRP as a distributed network on which transactions can be made, near-instantaneously.Bitcoin Cash (BCH)Bitcoin Cash is a hard fork of Bitcoin (BTC) with an 8MB block size as opposed to Bitcoins 1MB.Stellar (XLM)XLM (or lumens) is the native asset of the Stellar Blockchain. Stellar aims to facilitate the movement of currency across borders quickly and at low cost.EOS (EOS)EOS is a decentralized application platform, similar to Ethereum. EOS aims to achieve greater scalability than Ethereum but has some drawbacks, including less decentralization and questionable governance.Litecoin (LTC)Litecoin is a source code fork of Bitcoin, so shares many similarities to the leading coin. Differences include its Scrypt mining algorithm and its higher limit for the total number of coins that can be created.Cardano (ADA)Cardano was created by one of the Ethereum co-founders, Charles Hoskinson. Cardano claims it will be capable of running financial applications. It is being constructed in layers.Monero (XMR)Monero is the leading privacy coin. Transactions on Moneros ledger are obfuscated which means third parties cannot determine the source or destination of the funds.TRON (TRX)Tron was founded by Justin Sun, and claims to be dedicated to the establishment of a truly decentralized Internet and its infrastructure. The project is not without controversy, having borrowed source code heavily from other projects.IOTA (IOTA)IOTA was designed for Internet of Things (IoT) devices. IOTA enables data and financial exchange between these devices.Dash (DASH)Dash is a Bitcoin fork that enhances privacy, has low fees and near-instant transactions thanks partly to a proof of stake mining algorithm.Binance Coin (BNB)The Binance cryptocurrency exchange issuedBNB. Users of the exchange can utilize the coin to pay reduced trading feesNEM (XEM)NEM stands for New Economy Movement and is a fork of NXT. NEMs blockchain is designed for speed and scale and uses supernodes to achieve consensus.NEO (NEO)NEO is a Chinese blockchain project which aims to create a smart economy through the use of digital assets, digital identity and smart contracts.Ethereum Classic (ETC)Ethereum Classic is a fork of Ethereum which came shortly after the notorious DAO Hack. While Ethereum effectively rolled back the resulting transactions from the bad actor(s) created during the hack, Ethereum Classic chose to continue the chain without altering these transactions.Tezos (XTZ)Tezos is similar to Ethereum and EOS in that it facilitates smart contracts and dapps. Tezos uses on-chain governance and proof-of-stake mining algorithm known as baking.Are Litecoin and Bitcoin the Same?

While they have many similarities, they are not the same. Litecoin (LTC) uses the Scrypt mining algorithm, which is more simple than Bitcoins SHA-256 algorithm. Litecoin also has a maximum limit of 84 million coins that can ever exist, whereas Bitcoin has a limit of 21 million. Transactions on the Litecoin network will be confirmed after around two and a half minutes, faster than Bitcoins approximate 10 minute confirmation time.

Ethereum (ETH) is a decentralized, open source blockchain platform which enables technology known as smart contracts.Smart contracts enable decentralized applications (dapps), which developers can create to serve a variety of purposes in many different industries. Ethereum can be used to exchange money or anything else of value, and via smart contracts, these exchanges can happen once certain conditions have been met. The Ethereum ledger is public, and all historical transactions are publicly viewable.

In July 2016, Ethereum implemented a contentious hard fork to restore funds stolen during the DAO hack; a hack involving the theft of 3.6 million ETH. During this fork, miners who contended the restoration of stolen funds chose to continue mining on the previous chain, and Ethereum Classic (ETC) was born.

Ripple is the settlement system and network created by Ripple Labs Inc. It supports tokens tied to many units of value including fiat currencies and commodities.

Ripples native currency, XRP, was previously also referred to as Ripple. But since the question of whether XRP is a security remains unanswered, Ripple Labs have tried to distance their company and platform from the XRP cryptocurrency.

XRP is the native cryptocurrency of Ripple. It is used to help transfer value across the Ripple network. XRP acts as the bridge between two units of value on the peer-to-peer Ripple network.

This article explores the subtle differences between cryptocurrency coins and tokens, and why the term cryptocurrency is a misnomer.

Cryptocurrencies can be extremely hard to wrap our heads around, especially since their underlying technology the Blockchain is shrouded in computing language and terminology that is technical in nature. This is a huge barrier to many who are interested to learn more about cryptocurrencies and blockchain technology. But do not worry! Well guide you in understanding key cryptocurrency concepts that is great for you to know. (See more:Guide to Common Crypto Terms)

Lets start with understanding the definition of cryptocurrencies. Cryptocurrencies are digital or virtual currencies that are encrypted (secured) using cryptography. Cryptography refers to the use of encryption techniques to secure and verify the transfer of transactions. Bitcoin represents the first decentralized cryptocurrency, which is powered by a public ledger that records and validates all transactions chronologically, called the Blockchain. Heres an overview of how the blockchain works:

(Source: The Bernie Group)

Although many cryptocurrencies have existed prior to Bitcoin, its creation marks an important milestone in the realm of digital currencies, due to its distributed and decentralized nature. The creation of Bitcoin precipitated the expansion of a lush and more diverse ecosystem of other coins and tokens, that are often regarded as cryptocurrencies in general, even when most of them do not fall under the definition of a currency.

(See more:Evolution of Cryptocurrency: The Problem With Money Today)

It is important to note that all coins or tokens are regarded as cryptocurrencies, even if most of the coins do not function as a currency or medium of exchange. The term cryptocurrency is a misnomer since a currency technically represents a unit of account, a store of value and a medium of exchange. All these characteristics are inherent within Bitcoin, and since the cryptocurrency space was kickstarted by Bitcoins creation, any other coins conceived after Bitcoin is generally considered as a cryptocurrency, though most do not fulfill the aforementioned characteristics of an actual currency.

The most common categorization of cryptocurrencies are:

Alternative cryptocurrency coins are also called altcoins or simply coins. Theyre often used interchangeably. Altcoins simply refers to coins that are an alternative to Bitcoin. The majority of altcoins are a variant (fork) of Bitcoin, built using Bitcoins open-sourced, original protocol with changes to its underlying codes, therefore conceiving an entirely new coin with a different set of features. A central concept of modifying open source codes to create new coins is called hardforks, which is further explained in this article. Some examples of altcoins that are variants of Bitcoins codes are Namecoin, Peercoin, Litecoin, Dogecoin and Auroracoin. (Read also:Bitcoins Civil War: How and Why?)

Fun fact: A software fork occurs when there is a change in the underlying programming protocol, resulting in the forking or split of the original blockchain. This usually results in the creation of a new coin. There are different types of forks such as hard fork, soft forkor accidental fork.

There are other altcoins that arent derived from Bitcoins open-source protocol. Rather, they have created their own Blockchain and protocol that supports their native currency. Examples of these coins include Ethereum, Ripple, Omni, Bitshares, NEO, Waves and Counterparty.

A commonality of all altcoins is that they each possess their own independent blockchain, where transactions relating to their native coins occur in.

Fun fact: The first Altcoin was Namecoin, which was created in April 2011. It is a decentralized open source information registration and transfer system

(Read also:Guide on Identifying Scam Coins)

Tokens are a representation of a particular asset or utility, that usually resides on top of another blockchain. Tokens can represent basically any assets that are fungible and tradeable, from commodities to loyalty points to even other cryptocurrencies!

Creating tokens is a much easier process as you do not have to modify the codes from a particular protocol or create a blockchain from scratch. All you have to do is follow a standard template on the blockchain such as on the Ethereum or Waves platform that allows you to create your own tokens. This functionality of creating your own tokens is made possible through the use of smart contracts; programmable computer codes that are self-executing and do not need any third-parties to operate. It really is super cool! Heres a look at the process:

Tokens are created and distributed to the public through an Initial Coin Offering (ICO), which is a means of crowdfunding, through the release of a new cryptocurrency or token to fund project development. It is similar to an Initial Public Offering (IPO) for stocks, with critical distinctions whichare explained in this article. Many are crazy over ICOs as they represent a great way of identifying interesting projects that can provide great financial returns.

Fun Fact: A template for token creation is wonderful since it provides a standard interface for interoperability between tokens. This make it so much easier for you to store different type of coins within a single wallet. An example is the ERC-20 standard on the Ethereum blockchain, which has is used by over 40 tokens

(Read more: Analyzing Cryptocurrency Risk: Existing Coins vs ICO)

The main difference between altcoins and tokens is in their structure; altcoins are separate currencies with their own separate blockchain while tokens operate on top of a blockchain that facilitates the creation of decentralized applications. The majority of coins in existence (close to 80%) are tokens, since theyre much more easier to create.

(You might also be interested inWill A Crash in Bitcoins Price Lead to Its Demise?)

If youre starting your journey into the complex world of cryptocurrencies, heres a list of useful resources and guides that will get you on your way:

Its hard to imagine a time before cryptocurrency exchanges were stocked with hundreds of digital assets. A time before the pejorative shitcoin had been coined and there was no such metric as bitcoin dominance. But travel back to late 2010 and thats exactly what youd have found: a cryptosphere in which BTC was the only coin in town. But all that was about to change.

Also read: Bitcoin History Part 4: Casascius Creates Physical Bitcoins

The first altcoin to emerge following bitcoin wasnt litecoin, peercoin or dash. Rather, it was a now obscure cryptocurrency called namecoin (NMC). It was unveiled on the Bitcointalk forum on April 18, 2011, with a mandate that read quite differently from that of BTC. Compared to the many identikit alts that sprung up in the months to follow, NMC began life with novel intentions. Namecoin is a naming system based on bitcoin with a few modifications, explained its [announce] thread, utilizing a formula that is today known as an [ANN]. This is a new blockchain, separate from the main Bitcoin chain. Name/value pairs are stored in the blockchain attached to coin Names expire after 12000 blocks unless renewed with an update.

Curiously, but perhaps not surprisingly, the inspiration for Namecoin came from Satoshi himself, though he had no hand in its development. Four months earlier, Bitcoins creator had essentially conceived the idea of Namecoin, writing, in a thread titled BitDNS and Generalizing Bitcoin, While you are generating bitcoins, why not also get free domain names for the same work? If you currently generate 50 BTC per week, now you could get 50 BTC and some domain names too. Satoshi went on to explain a technical proposal involving merkle trees that would eventually form the basis for Namecoin.

Moreover, Namecoins goal of serving as a decentralized domain registration system may have been partially inspired by Satoshis own experience of purchasing the bitcoin.org domain in 2008. With no anonymous cryptocurrency with which to pay, he was forced to use anonymouspeech.com, which enables services to be acquired using gift cards.

Today, namecoin is effectively a dead coin, despite still being listed on Poloniex and Livecoin. In its seven-year history, NMC has had its moments of glory, like the time it pumped to $15.41 per coin or 0.014 BTC in Nov. 2013. Or the time it hit $8.64 in January of this year, one final burst of nostalgia at a time when every shitcoin under the sun was pumping. By then, namecoin was already a dead coin, with its bitcoin value reaching just 0.0006 BTC per coin. Today, its 24-hour trade volume stands at $15,000 and Namecoins DNS naming system is dead in the water. Thats not to say NMC has been an outright failure, however.

With over 2,000 cryptocurrencies now vying for supremacy, Namecoin can be credited with either starting the stampede or instigating the rot. Whatever ones assessment of Namecoin and the plethora of altcoins that followed, NMC was pivotal in demonstrating that there is space in the cryptosphere for more than just one digital asset. Today there are multiple bitcoins and a panoply of shitcoins, but at a 97 percent reduction from its all-time high, Namecoin embodies the fate of all altcoins to date. As the history books show, Bitcoin is easily emulated but never bettered.

Bitcoin History is a multipart series from news.Bitcoin.com charting pivotal moments in the evolution of the worlds first and finest cryptocurrency. Read part fourhere.